WORLD TRADE  
ORGANIZATION  G/SCM/N/123/TUR 
12 January 2006 
 (06-0154) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
New and Full Notification Pursuant to Article XVI:1 of the GATT 1994  
and Article 25 of the Agreement on Subsidies and  
Countervailing Measures  
 
TURKEY 
  
 The following communication, dated 6 January 2006,  is being circulated at the request of the 
Delegation of Turkey.  
_______________ 
 
 
  As it has been given in the original full notification of Turkey (G/SCM/N/95/TUR), in 
2003, once again in year 2005 we are pleased to pr esent the following information in a descriptive 
format.   In relation with the 2003 notification, there is no change regarding the two programmes for 
encouraging investments in Turkey, namely "The  General Investment Encouragement Programme 
(GIEP" and "The Programme for Aids Granted to  Small and Medium Sized Enterprises' (SMEs) 
Investments", details of which are given again in  the following pages for the sake of transparency. 
  The measures offered under the two programmes are not related directly to trade, they do not 
contain specific requirements, and use a regional a nd horizontal approach, it is  a programme which all 
types of investments of both domestic and foreign investors can take advantage of. 
  Apart from the above mentioned two programme s for the encouragement of investments, a 
new measure has been put into force for providing energy support within the context of "Law on 
Encouragements of Investments and Employment and Amendment of Certain Laws" (No. 5084, dated 
29 January  2004) issued by the Ministry of Finance.  The implementation of this measure is carried 
out by the Undersecretariat of Treasury in accordance with the provisions of Communiqué No. 2005/1, of which details are given in the following pages.   Additionally, if needed, detailed informa tion concerning the investment encouragement 
system, the Decrees and Communiqués in detail, as well as statistical data, can be obtained from the 
www. treasury.gov.tr website.   The following pages will give a more in depth description of the system. G/SCM/N/123/TUR 
Page 2  
 
  ENCOURAGING INVESTMENTS IN TURKEY 
 
 The Turkish Investment Encouragement System can be divided into two sub-headings, which 
are currently in force:  1. General Investment Encouragement Programme (GIEP)  2. Aids Granted to Small and Medium Sized Enterprises (SMEs) Investments 
 
 It should be noted that, as far as the mechanis m is concerned, domestic and foreign investors 
are equally treated;  the foreign investment comp anies can benefit from all encouragement measures 
and allowances granted to domestic companies.   
In order to qualify for investment encouragem ent measures, the foreign investors must first 
apply and qualify to receive an investment encouragement certificate from the General Directorate of 
Foreign Investments (GDFI), domestic investors alike must apply, qualify and receive their 
certificates from the General Directorate of Incen tives and Implementation (GDII).  Both of these 
General Directorates are  parts of the Undersecretariat of Treasury.  
 
1. The General Investment Encouragement Programme (GIEP)  
(a)  The legislative base and the title of the ge neral investment encouragement programme is : 
“DECREE CONCERNING STATE ENCO URAGEMENTS TO INVESTMENTS" 
(Decree No: 2002/4367, dated: 10 June 2002) 
(published in the Official Gazette dated at 09.07.2002 and No: 24810) 
 This main Decree also provides a base fo r "Aids Granted to Small and Medium Sized 
Enterprises' (SMEs) Investments".  
(b) The purpose of the general investment encour agement programme is to:  encourage, support 
and orient investments, in-line with intern ational commitments, in conformity with the 
objectives of Development Plans and Annual Programmes, in order to reduce regional 
imbalances within the country, create new em ployment opportunities, while taking advantage 
of advanced and appropriate tec hnologies with greater added valu e and to realize international 
competitiveness. 
(c)  The programme covers all investment ac tivities related to the production of goods and 
services, research and development (R&D), e nvironmental protection and improvement of 
quality and standards.  
(d) As mentioned above, one of the main objectiv es of the system is to eliminate inter-regional 
imbalances.  For this purpose the following regional classification is  established with the 
Decree: 
• Developed regions :  Istanbul and Kocaeli city boundaries.  Greater Municipality 
boundaries along with Ankara, Izmir, Bu rsa, Adana, and Antalya cities.  
• Normal Regions :  Cities situated outside of the Developed Region and Priority 
Development Region classifications.   G/SCM/N/123/TUR 
 Page 3 
 
 
  • Priority Development Regions : Cities, which are determined as the Priority Development 
Regions by the Decision of the Council of Ministers. 
 The list of the provinces within the Priority Development Regions  is given in Table I attached 
to this document. 
 As described above, in Turkey, mainly a regi onal/horizontal system is implemented within 
the state encouragement for investments. 
 
(e) How the programme works 
 
 In summary, no matter which sector the investor shall be operating in, all investors who have 
prepared their investment feasibility studies and propo sals, who believe that they shall be eligible for 
evaluation, within the set framework of the Decree, apply to the Undersecretariat of Treasury for the 
evaluation of their investment project to be considered for encouragement. 
  Applications to be made for the issuance of an investment encouragement certificate to the 
relevant authority are as follows: 
 
 I. All investments to be made by companies having foreign capital and their branches 
will be received by General Directorate of Foreign Investment (GDFI). 
  II. Investment encouragement certificate applications for domestic investments that have 
a fixed investment cost not exceeding four  trillion Turkish Liras (excluding those 
which can benefit from credit allocation measure) shall first be made to the local 
authorities.  In this way, it is aimed to ensure the participation of local governmental 
and non-governmental institutions in the i nvestment encouragement implementations. 
  III. For other investments, applications are made to General Directorate of Incentives and 
Implementation (GDII). 
 (f)  Procedure to Obtain an Inv estment Encouragement Certificate 
  An investor should complete and apply with  the following documents for an encouragement 
certificate: 
• Investment application form  
• The receipt of the amount deposited in the Ce ntral Bank, varying between 200 TRY or 400 
TRY according to regional developmental status of the location. 
• A notarized copy of authorized  signatures of the company  
• A copy of the trade registry gazette in whic h the Articles of Association is published. 
 
 Once the application is completed and presented for evaluation purposes, in conformity with the Decree and Communiqués, eligible investme nt projects are evaluated and granted an 
Encouragement Certificate after an analysis of each project proposal. 
  As far as all the related procedures are con cerned for the investment encouragement system, 
there are no differences between foreign and domestic  investors.  The "Certificate" mentioned above 
contains specific encouragement measures which are granted to the investment.  
 G/SCM/N/123/TUR 
Page 4  
 
  (g)  Encouragement Measures 
 Within the objectives and the scope of the programme, eligible investments projects which 
are granted a certificate can benefit from the following encouragement measures: 
 (a) Exemption from Customs Duties and Fund Levies 
 (b) Value Added Tax Exemption for importe d and domestically purchased machinery 
and equipment 
 (c) Credit allocation from the Budget  
 
Definitions, descriptions of the encouragement measures:  
(a) Exemption from Customs Duties and Fund Levies 
 
 For the investment projects which are evaluated and found eligible by the Undersecretariat of 
Treasury,  imports of the machinery and equipment to be used in the production process shall be 
subject to Customs Duty exemption.  Once the exem ption is listed on the "Certificate", the investor 
can import the machinery and equipment indicated on the approved list, namely the "Machinery and 
Equipment List" aiming only at the purposes of the investment in question, without paying any customs duties.  (b) Value Added Tax Exemption for importe d and domestically purchased machinery and 
equipment 
 
 Pursuant to Law No. 4369 dated 22/7/1998, imports and domestic purchases of machinery 
and equipment within the scope of approved machinery and equipment lists attached to the investment  
encouragement certificate are exempted from the Value Added Tax.   
(c) Credit allocation from the Budget 
  Credit can be allocated in order to guide a nd encourage the investments aiming at regional 
development, research and development (R&D) inv estments, environmental protection investments, 
investments in priority technology areas which are to be determined by Higher Science and 
Technology Board or Scientific and Technical Research Council, investments to be moved to 
provinces specified for regional development and inv estments to be moved to priority development 
regions and other organized zones from develope d regions and manufacturing, agro-industry and 
mining investments to be realized  in the priority development regions in compliance with the 
legislation on State Encouragement to Investments.  
 The limit for the investment credits aiming at regional development is 30 per cent of the fixed 
investment cost and also shall not exceed 4.5 Million TRY.  For research and development investments, environmental investments, priority  technology investments and investments to be 
moved to organized industrial zones, the limit for the credits is 50 per cent of the fixed investment 
cost and shall not exceed 400 Thousand TRY.   
 Also for manufacturing, agro-industry and mini ng investments to be realized in the priority 
development regions, investment credit can be provi ded up to 50 per cent of the fixed investment 
costs and shall not exceed 500 Thousand TRY.  After the completion of the investment, operating credit shall be provided to the establishments whic h create an employment of at least 50 persons.  
Operating credit can also be provided to existing en terprises in the priority development regions with 
insufficient operational capital and which employ at least 50 workers.  The amount of operating credit 
shall not exceed 200 Thousand TRY.  In case both investment and operating credits are allocated together, total amount of credit shall not exceed 700 Thousand TRY.  G/SCM/N/123/TUR 
 Page 5 
 
 
   The interest rate is 20 per cent for investme nt credits, 30 per cent for operational credits.  
Term structure of the investment credits aiming at regional development is 6 years with a 3-year grace period and for other types of investments 5 years with a one year grace period.  The term structure is 2 years for operational credits.  
 Credit applications are received and evaluate d by various intermediary banks assigned for the 
allocation of credits.  
2.  Aids Granted to Small and Medium Sized Enterprises (SMEs) Investments 
 
In Turkey, the importance of small and me dium-sized enterprises for economic life was 
realized at the beginning of the 1990’s.  In the mi d 1990’s, with the ratification of 1/95 Association 
Council Decision, Customs Union with the Eu ropean Union has been established as of 
1 January 1996.  In order to help survival and co mpetitiveness of  the Turkish  SMEs in the Customs 
Union,  design of new support mechanisms seemed necessary at that time. 
 
 Currently, the investments of small and medium sized enterprises are supported with  Decree 
No. 2000/1822, dated:  21 December 2000 “DE CREE  FOR STATE AIDS IN INVESTMENTS 
FOR SMES” (published in the Official Gazette dated at 18.01.2001 and No. 24291).  
 
• In line with the development plans and yearly programmes, the related legislation aims to: 
• encourage the investment of SMEs; 
• increase production and improve quality standards; 
• supply the demands in relati on to the product development; 
• increase employment; 
• bring about a level competition within the Customs Union.  
 
• Within the framework of the Decree, SMEs investments are defined as follows: 
 
(a) Investments of undertakings  
 
  - operating in the manufacturing, agro-industry and 
 
 - holding assets with a total value excluding land and building including 
machinery-equipment,  installations, ve hicles, furniture and office stocks not 
exceeding 950 Thousand TRY and,  
 
  - employing   
1-9 workers (defined as micro size), 
10-49 workers (defined as small size),   
50-250 workers (defined as medium size)  
 
 (In developed regions, excluding research a nd development investments, environmental 
protection investments and investme nts to be made in technology pa rks, special organized industrial 
zones, and small industria l zones consisting small i ndustrial sites determined by the Ministry of 
Industry and Trade, organized industrial zones and small industrial sites, investment encouragement 
certificate cannot be issued for completely new investments.) 
  (b) designated investments in tourism (in addition to modernization investments of 
existing accommodation facilities, investments to be made in regions excluding the 
zone from southern provincial border of Çanakkale to eastern provincial border at 
Mersin at a distance of 3 km to coastal border and in the province of Nev şehir 
excluding the borders of central, Ürgüp and Avanos towns); G/SCM/N/123/TUR 
Page 6  
 
   
 (c) investments in the area of health sector to be made in priority development regions;   (d) investments in education to be made in  priority development regions and investments 
related to capacity increase and modernizati on in primary and higher education to be 
made in normal regions and developed regions, 
  (e) extraction and mineral processing investments in mining industry,  
  (f) investments in software development. 
 
 The SMEs purchase of machinery-equipment and raw materials are supported with the issuance of an Investment Encouragement Certificate granted by the Undersecretariat.  In order to be 
eligible for the encouragement measures, machinery-equipment and/or raw material investment 
subject to the Investment Encouragement Certif icate shall not exceed 950 Thousand TRY, (these 
amounts have been amended with the Circular No. 2003/1, which was published on the Official 
Gazette dated September 10
th 2003.)  
 
The first application of investor shall be made to the related branch of  
 
• Turkish Development Bank for the investments to be made in the tourism, education, 
health and agro-industry in which it is specialized;  and 
 
• Halkbank, Turkish Industrial Develo pment Bank for the other sectors. 
 
The related branch of the assigned intermediary  bank receiving the application evaluates the 
project of the investor.  After the intermed iary bank's approval, the necessary documents are 
submitted to the Undersecretariat of Treasury for the issuance of an Encouragement Certificate 
following a final evaluation. 
• The investments of  SMEs benefit from the following encouragement elements: 
 (a) Exemption from Customs Duties and Fund Levies 
 (b) Value Added Tax Exemption for impor ted and domestically purchased machinery 
and equipment 
 (c) Credit allocation from the Budget 
 
There are certain ceilings set in respect to the am ount of credits to be allocated and the interest 
rates to be applied depending on the regional location of the investment.  The interest rate of 
investment credits is 10 per cent for the projects in  priority development regions and 15 per cent for 
the projects in other regions.  For operational credits, the interest rate is 15 per cent for the projects in 
priority development regions and 25 per cent for the projects in other regions.  
 The maximum amount of credit that can be  allowed for investment projects in the 
manufacturing and agro-industr y sectors is given below. 
   G/SCM/N/123/TUR 
 Page 7 
 
 
  Maximum investment credit ratios available to SMEs 
(as a percentage of fixed investment cost)  
 
 Priority development 
region Normal region Developed region 
Micro-sized companies 60% 50% 40% 
Small-sized companies 50% 40% 30% 
Medium-sized companies 40% 30% 20% 
 
 The amount to be allowed cannot exceed:   - 475 Thousand TRY for investment credits,  - 75 Thousand TRY for operational credits,  - 475 Thousand TRY for investment credits and 190 Thousand TRY for operational credits 
when both types of credit are allocated together. 
  The maximum maturity period of credits to be a llocated to SMEs is 4 years for the investment 
credits and 2 years for the operational credits.  In the investment credits no repayment is done in the 
first year. 
 
ENERGY SUPPORT 
 Energy support is provided within the contex t of "Law on Encouragement of Investments and 
Employment and Amendment of Certain Laws" (N o. 5084, dated 29 January 2004) issued by the 
Ministry of Finance.  The Communiqué con cerning the implementation of the energy support 
(No. 2004/1, published in the Official Gazette No . 25487, dated 9 June 2004) was issued by the 
Undersecretariat of Treasury and the Minister in ch arge of Undersecretariat of Treasury is responsible 
from the implementation of the provisions of this  Communiqué.  Law No. 5084 has been amended by 
Law No. 5350, dated 12 May 2005.   Energy support is provided in  the provinces which have a GDP per capita equal to or less than 
1500 US $ as of 2001 and provinces which have  negative socio-economic development index value 
for 2003 as calculated by State Planning Organisation.  List of these provinces is given in Table II in 
the Annex. 
 
 In order to be eligible to  benefit from the energy support: 
 
 (a) companies which had started operation after 1.4.2005 
   (i) operating in animal husbandry (including aquaculture and poultry), 
 greenhouse production, certificated s eed production and cooling warehouse 
 sectors and having the minimum capacities determined in the related 
 Communiqué should employ at least 10 labourers. 
   (ii) operating in manufacturing in dustry, mining, tourism accommodation
 facilities, education and health and having the minimum capacities determined in the related Communiqué should employ at least 30 labourers. 
 
 (b) Companies which had started operation before 1.4.2005 should increase their 
employment by at least 20 per cent of the labourer number that they have notified to the related authority in their last mont hly premium and service document before 
1.1.2005 and reach to the above menti oned corresponding labo urer numbers for 
sector groups. G/SCM/N/123/TUR 
Page 8  
 
   
 The eligible companies can benefit fro m the energy support to the below rates: 
  (a) For the companies which had started operation after 1.4.2005, the energy 
support rate is 20 per cent.  For e ach additional employment above the 
minimum number, support rate increases 0.5 point. 
  (b) For the companies which had started operation before 1.4. 2005, the energy 
support rate is 20 per cent.  For e ach additional employment above the 
determined minimum number, support rate increases 0.5 per cent. 
 
 The maximum rate of energy support is 40 per cent of the electricity cost of the company.  This rate is applied as 50 per cent for companies established in the Organized 
Industrial Zones or Industry Zones.  
 In order to benefit from the energy support, companies should apply to the Industry and 
Trade Provincial Directorates.  G/SCM/N/123/TUR 
 Page 9 
 
 
   
ANNEX:  
COMPLIMENTARY DATA ON THE INVE STMENT ENCOURAGEMENT SYSTEM: 
 
TABLE I. 
 
List of Provinces within the Priority Development Regions in Turkey  
 
1. Ad ıyaman 26.  Kars  
2. Ağrı 27. Kastamonu 
3. Aksaray 28. K ırıkkale 
4. Amasya 29. K ırşehir 
5. Ardahan 30. Kilis  6. Artvin 31.  Malatya  
7. Bart ın 32.  Mardin 
8. Batman 33.  Mu ş  
9.  Bayburt 34.  Nev şehir 
10.  Bingöl 35.  Ni ğde 
11.  Bitlis 36.  Ordu 12.  Çanakkale (Bozcaada and Gökçeada) 37.  Osmaniye 
13.  Çank ırı 38.  Rize 
14.  Çorum 39.  Samsun 15.  Diyarbak ır 40.  Siirt 
16.  Elaz ığ 41.  Sinop 
17.  Erzincan 42.  Sivas 
18.  Erzurum 43.  Şanl ıurfa  
19.  Giresun 44.  Şırnak 
20.  Gümü şhane 45.  Tokat  
21.  Hakkari 46.  Trabzon 22.  Iğdır 47.  Tunceli 
23.  Kahramanmara ş 48.  Van 
24.  Karabük 49.  Yozgat 
25.  Karaman 50.  Zonguldak  G/SCM/N/123/TUR 
Page 10  
 
   
TABLE II. 
 
List of Provinces within the Scope of Energy Support  
 1. Ad ıyaman 26. Ordu 
2. Afyon 27. Osmaniye 3. Ağrı 28. Siirt 
4. Aksaray 29. Sinop 5. Amasya 30. Sivas 
6. Ardahan 31. Şanl ıurfa 
7. Bart ın 32. Şırnak 
8. Batman 33. Tokat 9. Bayburt 34. U şak 
10. Bingöl 35. Van 
11. Bitlis 36. Yozgat 
12. Çank ırı 37. Artvin 
13. Diyarbak ır 38. Çorum 
14. Düzce 39. Elaz ığ 
15. Erzincan 40. Kahramanmara ş 
16. Erzurum 41. Karaman 
17. Giresun 42. Kastamonu 
18. Gümü şhane 43. Kilis 
19. Hakkari 44. Kütahya 20. Iğdir 45. Nev şehir 
21. Kars 46. Ni ğde 
22. K ırşehir 47. Rize 
23. Malatya 48. Trabzon 24. Mardin  49. Tunceli 25. Mu ş   
 
 
__________